Article by
Barbados Today

Published on
November 22, 2018

The big break that our businesses have so longed for came wrapped up in all but Christmas wrapping paper just ahead of the season of giving as the Prime Minister delivered a massive corporate tax cut on Tuesday.

Imagine, then, the resounding echo of collective cheers across the business community. Consider, then, that a mission-crippling 25-30 per cent corporate tax rate will vanish into the thin air of one per cent and 5.5 per cent rates on taxable income. Expect, then, that any trepidation that business operators were experiencing as 2019 nears dissipated with the surprise announcement.

The about-turn in the country’s tax regime, Mottley explained, was driven by a promise given by the former Freundel Stuart administration to the self-appointed global tax watchdog, the Organization for Economic Cooperation and Development (OECD). The Promise – Barbados would dismantle the country’s 40-year tax regime, removing any distinction between domestic and international taxes by December 31.

The penalty for inaction was severe – international sanctions – and so Mottley said her Government opted to “turn another act that threatened to weaken the Barbados economy… into an opportunity.”

It’s an opportunity the private sector will doubtless grab with both hands and feet. No doubt CEOs, board chairpersons and Chief Financial Officers have already began to crunch the numbers even if just in their heads.
A pleased head of the Barbados Private Sector Association Edward Clarke told Barbados TODAY the move will deliver benefits to companies that could boost the economy.

Said Clarke, “Something like this I would expect to grow the economy; if companies have more money to invest through lower taxation it will certainly make investment a lot more attractive and once investments are attractive people are going to invest funds for future returns. So I think it is a very good thing for the Barbados economy.”

Noted economist Jeremy Stephen also suggested that not only would the island become an “attractive low tax jurisdiction” but there would be a rise in the Gross Domestic Product, and private companies would have more fiscal space to even absorb the workers being sent home by the Government.

But while the pundits, economists, and analysts weigh the benefits or harms of the measure, ordinary Barbadians who have been crying out for tax relief will no doubt ask themselves, what’s in it for me?

While delivering the good news Prime Minister Mottley insisted that consumers must benefit.

“With these new tax rates I lay down a challenge to domestic companies that there must be benefits to the country…. Barbadians will expect these benefits to be in the form of higher local investment, more enfranchisement of employees and better pay.”

It is not only fair but about time that business delivers.
Consumers who are yet to get any major relief from the high prices with the removal of the National Social Responsibility, (NSRL) will be watching closely, especially since workers will continue to pay high income tax rates while directors enjoy their tax cut.

The private sector is, after all, the engine of the economy – the business folk keep us reminding us so. And they trot out the well-worn mantra that Government is to facilitate profit-making, and be responsible for making sure most of the things that enable the economy continue to function – roads, airports, an educated workforce, and the like.

With this generous measure, the private sector must create new products and services; set up fresh innovative companies, and with them should come new jobs and new sources of income. Or will the tax cut merely fatten the pockets of owners and widen the income inequality gap in this nation?

The role of the private sector is even more critical today giving the state of the Barbados economy. So the extent to which the private sector can make the necessary investment, expand their operations and engage in innovation, then the Barbados economy will rebound and grow and everybody can benefit.

With these historic tax cuts, the Government may risk running out of revenue. Business has just run out of excuses.

Post navigation

8 thoughts on “#BTEditorial – Barbados expects that businesses will do their duty”

Christmas indeed came in November for Barbados Private Sector Association members; How sweet the name of Mia sounds, she’s does all things for us. She gives us all we say we need, and screws the people indeed. The present regime is doing everything to please the BLP masters, while begging these unscrupulous businessmen/women, to please do the right thing so the other Barbadian citizens will benefit. Begging does NOT work with these parasites, tough measures/actions do. Words such as, “the government will do this, you must do that, and if you do not, this will not happen”. Strict and tough conditions have got to accompany any concessions made to those foreign reserve abusers, that form the BPSA. Government MUST offer incentives to investors in manufacturing and agriculture, if this island is to survive its economic perils.So far, the private sector has offered nothing but talk, and just like the greedy hoteliers – they are getting oysters with champagne while thousands of people are losing their jobs for Christmas and forever. Government must put their demands into law if necessary, to force these business leaches to pull their weight, if not they will continue to raise prices on the imports they make, and scoff at and ignore, all the begging MPs can and will do.

The only people in Barbados right now with broad smiles on their faces are the members of the White and Indian dominated Barbados private sector. They must have broken out the Champagne and Caviar and celebrated with vigor.

On the other hand Bajans who are of the same skin colour as MIA AMOR MOTTLEY and her bloated cabinet, are despondent, depressed, dejected, and disheartened.

Instead of giving people who look like her a break, she has given it to the minorities of Barbados.
The Govt. is now practicing trickle down economics. They are hoping that more crumbs will fall from the tables of the rich and famous to those at the bottom.

NOT GOING TO HAPPEN. IT HAS NEVER HAPPENED IN THE PAST.IT WILL HAPPEN IN THE FUTURE.

JOHNNY: You cannot ascribe this one to the present administration. According to the Prime Minister this measure was agreed upon by the previous administration. How it is managed will solely depend on the subsequent actions of this present administration. I am hoping that the results will generate real and sustainable growth in the country and that ordinary citizens will benefit.

The OECD want local and offshore entities to have a similar tax rate. Yes the measures were agreed upon by the last administration to comply to the wants of the OECD to keep this country’s name off of the man-made rich countries black list. But there were different ways that compliance could occur. It could have been raising the offshore companies rates, lowering the local companies rates or doing both and meeting somewhere in the middle. However we gave into the wants of big business and lowered the rates to almost nothing.